There's a funny sign that reads: "Confused Socialist Party. Smash capitalism! Then blog about it on your $2500 Macbook." All of the major economies in the world are known as mixed economies. You might ask why is it necessary to have a mixed economy if socialism is so good and capitalism so bad. Likewise, you could ask why is it necessary to have socialism if capitalism is so good. In her speech, Ayn Rand presents the fundamentals for a mixed economy, and they aren't pretty. But are they true - is she right?

Partial transcript:

Ladies and gentlemen, I shall begin by doing a very unpopular thing that does not fit today's intellectual fashions, and is, therefore, anti-consensus. I shall begin by defining my terms so that you will know what I am talking about. Let me give you the dictionary definition of three political terms: socialism, fascism, and statism. Quote - Socialism: a theory or system of social organization which advocates the vesting of the ownership and control of the means of production, capital land, etc. in the community as a whole. Fascism: a governmental system of strong centralized power, permitting no opposition or criticism, controlling all affairs of the nation, industrial, commercial, etc. Statism: the principle or policy of concentrating extensive economic, political, and related controls in the state at a cost of individual liberty. These definitions are from the American College Dictionary, 1957.

It is obvious that statism is the wider, generic term of which the other two are of specific values. It is also obvious that statism is the dominant political trend of our day. But which of those two variants represents the specific direction of that trend? Observe that both socialism and fascism involve the issue of property rights. The right to property is the right of use and disposal. Observe the difference in those two theories. Socialism negates private property rights altogether and advocates the vesting of ownership and control in the community as a whole, that is, in the state. Fascism leaves ownership in the hands of private individuals but transfers control of the property to the government. Ownership without control is a contradiction in terms. It means property without the right to use it or to dispose of it. It means that the citizens retain the responsibility of holding property without any of its advantages, while the government acquires all the advantages without any of the responsibility. In this respect, socialism is the more honest of the two theories. I say more honest - not better because, in practice, there is no difference between them. Both come from the same collectivist/statist principle, both negate individual rights, both deliver the livelihood and the lives of the citizens into the power of the omnipotent government, and the differences between them are only a matter of time, degree, and superficial detail, such as the choice of slogans by which the rulers dilute their enslaved subjects.

...This anti-ideology has a new, and very ugly name. It is called government by consensus. If some demagogue were to offer us as a guiding creed the following tenets: that statistics should be substituted for truth, vote counting for principles, numbers for rights, and public polls for morality, that pragmatic, range-of-the-moment expediency should be the criterion of a country's interests, and that the number of its adherents should be the criterion of an idea's truth or falsehood, that any desire or any nature whatsoever should be accepted as a valid claim provided it is held by a sufficient number of people, that a majority may do anything it pleases to a minority - in short, gang-rule and mob-rule. If a demagogue were to offer it, he would not get very far. Yet all of it is contained in and camouflaged by the notion of government by consensus.

...There can be no meeting ground, no middle, no compromise between opposite principles. There can be no such thing as moderation in the realm of reason and of morality. But reason and morality are precisely the two concepts abrogated by the notion of government by consensus. The advocates of that notion would declare at this point that any idea which permits no compromise constitutes extremism, that any form of extremism, any uncompromising stand, is evil. That the consensus sprawls only over those ideas which are amenable to moderation, and that moderation is the supreme virtue superseding reason and morality. This is the core, the essence, the motive, the real meaning, of the doctrine of government by consensus. The cult of compromise.

Compromise is the precondition, the necessity, the imperative of a mixed economy. The consensus doctrine is an attempt to translate the brute paths of a mixed economy into an ideological or anti-ideological system and to provide them with a semblance of justification. A mixed economy is a mixture of freedom and controls with no principles, rules, or theories to define either. Since the introduction of controls necessitates and leads to further controls, it is an unstable, explosive mixture which ultimately has to repeal the controls or collapse into dictatorship. A mixed economy has no principles to define its policies, no principles to define its goals, no principles to define its laws, no principles to limit the power of its government. The only principle of a mixed economy which, necessarily has to remain unnamed and unacknowledged, is that no one's interests are safe, everyone's interests are on a public auction block, and anything goes for anyone who can get away with it. Such a system, or more precisely anti-system, breaks up a country into an ever-growing number of enemy camps, into economic groups fighting one another for self-preservation, in an indeterminate mixture of defense and offense, as the nature of such a jungle demands.

...ordinary human concern for human distress does not manifest itself ordinarily in the form of a gun aimed at the wallets and earnings of one's neighbors.

...Ladies and gentleman, if any of you doubt the power of philosophy to set the course and shape the destiny of human societies, observe that our mixed economy is the literal, faithfully carried-out product of pragmatism, and of the generation brought up under its influence. Pragmatism is the philosophy which holds that there is no objective reality, no permanent truth, no absolute principles, no valid abstractions, no firm concepts, that anything may be tried by rule-of-thumb, that knowledge is to be gained by means of public polls among special elites of competent investigators, that objectivity consists of collective subjectivism, that whatever people wish to be true is true, whatever people wish to exist does exist - provided a consensus says so. If you want to avert the final disaster, it is this type of thinking - every one of those propositions and all of them that you must face, grasp, and reject. Then you will have grasped the connection of philosophy to politics, and to the daily events of your life. They you will have learned that no society is better than its philosophical foundations. And then, to paraphrase John Galt, you will be ready not to return to capitalism, but to discover it.

The New Fascism: Rule by Consensus by Ayn Rand (1965) (54-minute podcast)

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Original posting by Braincrave Second Life staff on Jan 9, 2011 at http://www.braincrave.com/viewblog.php?id=428